The Board of Audit and Inspection stated that Korea Hydro & Nuclear Power had engaged in inappropriate accounting practices, such as deliberately delaying payments for construction and services.
The Board of Audit and Inspection disclosed a report on public institution settlement of account and accounting audit operations on 4th.
The Board of Audit and Inspection first analyzed the accounting audit operations of 87 public enterprises and quasi-governmental agencies, evaluating that the audit commissioner selection committee was managed in a formal manner, and evaluation indicators unrelated to audit quality were used, resulting in insufficient independence and professionalism. Sixty-five institutions selected auditors without setting audit time, and 50 institutions included accounting advisory services in the audit tasks, compromising the independence of auditors.
In particular, KHNP allocated only 71.4% of the 1.8935 trillion won budget for maintenance costs to improve its net profit for the fiscal year 2023, while disposing of the remainder. In this process, it requested that KEPCO KPS, which had completed the maintenance work, delay the application for final inspection, resulting in payment delays of up to 293 days. Consequently, the amount of unclaimed construction payments soared from 84.6 billion won at the end of 2021 to 269.2 billion won at the end of 2023.
The Board of Audit and Inspection pointed out that, even though KHNP had already completed construction and services worth 494.4 billion won, it did not account for costs and liabilities until the time of billing, deeming the accounting treatment inappropriate. There were also cases where assets under construction, which were actually in use or simply maintenance costs, were misclassified as 85.9 billion won.
Korea Asset Management Corporation (KAMCO), which holds 100% equity of the 'Fresh Start Fund', excluded it from the consolidation in the fiscal year 2023, failing to reflect a net loss of 120.8 billion won. Korea Electric Power Corporation (KEPCO) distorted assets and liabilities by not replacing the transmission facility user burden fee of 86.9 billion won received from the power generation operator with construction burden fees, and also did not remove the technology review fee of 36.6 billion won, which had the nature of an internal transaction, from the consolidated financial statements.
In this audit, the Board of Audit and Inspection focused more on guidance rather than sanctions, informing the Ministry of Economy and Finance and each agency of ways to improve accounting audit operations and accounting treatment.
A Board of Audit and Inspection official noted, "Public institution accounting information is fundamental to the management of finances and public fees, so transparency and reliability must be ensured," adding that it would strengthen management and supervision to rectify improper accounting practices.